How to Budget Better When Money Is Tight

When money's tight, budgeting is more important than ever. The irony, of course, is that the more money you have coming in, the easier it is to budget. Too often, when you don’t have a lot of money, the numbers just don't add up. Life is too expensive, and there’s not enough coming in.

Unfortunately, if a situation like that goes on for long enough, there's only one outcome: debt. Families turn to credit cards, payday loans, lines of credit – anything they can to make ends meet. Credit is more readily available than it’s ever been, especially the high-interest variety. But that will quickly make the problem worse when the bills come due.

As frustrating as it can seem, there are ways to make it work. These budgeting tips for families will help you re-evaluate your finances and control where your money goes.

#1 Prioritize Housing

Housing is often the single most expensive item in any budget. Personal finance experts often cite the “30% rule” that you should only spend 30% of your after-tax income on housing. But if you live in one of the many overpriced markets, either as a renter or homeowner, you know that it's common to spend much more on shelter.

Housing is likely your most important expense. Always prioritize rent payments, as losing your home could cause even bigger financial problems.

#2 Plan Meals for the Week

Groceries are always a budget-killer. They can eat up a huge chunk of your budget, but they're essentials, so it's hard to cut back. One of the best things you can do for your wallet is to make meal plans for the week and buy groceries accordingly. Mid-week grocery trips are a nasty spending trap that will have you blowing past your spending limits.

#3 Know How Much You Can Spend

Money is stressful, and focusing every day on the need to “cut back” and spend less only aggravates that stress. While it might motivate you in the short-term, stress means you’ll be more likely to give up and throw your hands in the air.

Here's a great budgeting hack that gets around it: subtract your fixed expenses (like housing) from your after-tax income. The rest is what you have leftover to spend on everything else. There are many different choices you can make with that money, like buy takeout, save it, or put it toward debt. But it's an attitude that can help you approach your budget as a positive thing, not something that holds you back.

#4 Become a Cord Cutter

Do you still have cable? Compared to a single streaming service, cable packages are really expensive. You can save a lot just by simplifying your entertainment options. Keep in mind that the costs of multiple streaming services can add up, though.

#5 Save an Emergency Fund

If you're lucky enough not to have any debts, you should make room in your budget to save an emergency fund. It will help bail you out of a situation when you have emergency expenses or experience a loss of income.

Take a different approach to budgeting. You can make it work, even if money is tight. Whatever you do, avoid going into debt that you won’t be able to repay later.